Proposed MSD rate hikes not unfair to customers, panel says

Rate recommendations set to go to trustees Aug. 13


Rate increases proposed by the Metropolitan St. Louis Sewer District do not impose an unfair burden on customers, the district’s Rate Commission decided last week.

The Rate Commission voted 7-4 July 19 to recommend that MSD’s proposed rate hikes for next year are “fair and reasonable to all classes of ratepayers.”

In two separate votes, the Rate Commission also recommended that the district not pursue any bonding or debt financing to reduce those rates for customers.

The Rate Commission voted 7-4 against pursuing debt financing to reduce next year’s proposed rate hike and also voted 8-3 in opposition to letting voters decide no later than November 2008 whether they would like the district to use debt financing to reduce rates.

Rate Commission members voting in favor that the rate increases are “fair and reasonable” are: Rate Commission Chairman George Toenjes of the Associated General Contractors of St. Louis, Nancy Bowser of the League of Women Voters, George Allen of the Home Builders Association of Greater St. Louis, George Tomazi of the Engineers’ Club of St. Louis, Mike Schoedel of the St. Louis County Municipal League, William Peick of the St. Louis Council of Construction Consumers and Daniel P. Murphy of the Building and Construction Trades Council.

Voting in opposition to the “fair and reasonable to all classes of ratepayers” recommendation are: Rate Commission Vice Chairman John L. Stein of the Missouri Industrial Energy Consumers, Virginia Harris of the Sierra Club, Willard Reeves of the Human Development Corp. of Metro St. Louis and Steven R. Sullivan of the Regional Chamber & Growth Association.

As for the debt-financing votes, only Bowser, Reeves, Stein and Sullivan were in favor of recommending that debt financing be used to reduce rates and only Stein, Sullivan and Tomazi were in favor of asking voters to consider debt financing by no later than November 2008.

The commission tentatively is scheduled to present its final recommendations for rate increases on Monday, Aug. 13, to the MSD Board of Trustees.

The district’s proposal would provide $661 million in financing for projects tied to the MSD’s Capital Investment and Replacement Plan, or CIRP.

That plan essentially would be carried out through a pay-as-you-go system paid with funds generated from rate increases in both wastewater and stormwater services.

The district plans to spend an estimated $671.5 million on those CIRP projects.

MSD officials earlier this year proposed rate increases that could go into effect as soon as January to update sewer and stormwater systems and prevent additional government regulation or lawsuits.

But the sewer district was sued June 11 by the U.S. government, acting on behalf of the Environmental Protection Agency, and the state of Missouri alleging unlawful dumping of raw sewage into area waters and lands. The lawsuit alleges that MSD has “discharged pollutants,” including raw sewage, into waters including the Mississippi River, Missouri River, Meramec River, River Des Peres and their associated tributaries, including creeks.

Specifically, the suit alleges that on roughly 500 occasions from 2000 to 2005, more than 500 million gallons of raw sewage was dumped into the Mississippi River, River Des Peres and their tributaries.

The federal and state government also allege that on more than 7,000 occasions between 2001 and 2005, MSD discharged pollutants containing raw sewage “onto public and private property, including without limitation, streets, yards, public parks, and playground areas, and into buildings, including homes, located in the city of St. Louis and St. Louis County, where persons have or may have come into contact with such sewage.”

The sewer district covers all of the city of St. Louis and 90 percent of St. Louis County. Both the state of Missouri and the U.S. are seeking numerous damages from MSD for alleged discharges in violation of the federal Clean Water Act. They are seeking penalties not to exceed $27,500 per day for each violation that occurred between Jan. 30, 1997, and March 14, 2004, and penalties not to exceed $32,500 per day for each violation that occurred on or after March 15, 2004.

The plaintiffs also are seeking several permanent injunctions to ensure that MSD will prevent any future violations.

As proposed earlier this year and scheduled to be presented in August, MSD customers in 2008 would see a 64-percent increase in wastewater-service rates. That 64-percent rate hike would be done in incremental increases from January at the earliest through 2012. The average MSD customer would go from paying $22.38 per month for sewer service to $36.79 per month by the district’s 2012 fiscal year, which begins July 1, 2011.

In some cities where the EPA has taken legal action to repair sewage problems, monthly residential rates are in excess of $50, according to MSD spokesman Lance LeComb.

And instead of a 24-cent monthly flat fee paid by all district customers for stormwater service, the district has proposed a system based on the amount of impervious — or non-absorbent— property on an owner’s lot. Impervious property includes non-absorbent property like driveways, roofs, garages and parking lots.

The proposal calls for the district to be-gin charging 12 cents for each 100 square feet of impervious property and then gradually raise that level in increments to 19 cents per 100 square feet of non-absorbent land by July 1, 2011.

The average residential customer then would pay $4.76 per month for stormwater service, according to the district.